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A large Carnival cruise ship docked in the harbor in turquoise blue water.
Dreamstine
Shares of
Carnival
rose on Friday after the cruise line posted second-quarter earnings that rose sharply from the first quarter of 2022.
Carnival
(marker:
CCL
) reported a GAAP loss of $1.61 per share, wider than analysts’ estimates of a loss of $1.08 per share. Revenue was $2.4 billion, up nearly 50% from the first quarter, but below forecasts for $2.76 billion, according to FactSet.
Occupancy in the second quarter was 69%, up from 54% in the previous quarter. Customer deposits, on the other hand, rose $1.4 billion to $5.1 billion as of May 31, from $3.7 billion at the end of February.
As of Friday, 91% of the company’s capacity was in operating guest cruises, while booking volumes for future cruises in the second quarter were nearly double booking volumes during the first quarter. Five of Carnival’s nine brands now have their entire fleets back in guest cruise operations.
“It’s encouraging to see continued strength in demand with our guests overcoming far more restrictive protocols than the general public and travel in general, leading to a near-doubling of booking volumes since last quarter with short-term bookings outpacing the year 2019,” Arnold Donald said. , the current chief executive. “We were encouraged by the pent-up demand and remain focused on optimizing utilization while maintaining long-term pricing.”
Carnival anticipates an improvement in adjusted cruise costs excluding fuel from the first half of 2022 to the second half of 2022.
The company added that the Covid-19 pandemic, inflation and higher fuel prices were having a “material impact” on the company’s business and that it expected to report a net loss for the third quarter of 2022 and the fiscal year. Carnival believes adjusted EBITDA, or earnings before interest, taxes, depreciation and amortization, will improve with continued cruise operations until it returns to historical levels in 2023. The company expects positive adjusted EBITDA for the third quarter of 2022.
Carnival also reaffirmed its commitment to its previously announced legacy plan. Effective August 1, Donald will be named vice chairman of the board, while Josh Weinstein, the current chief operating officer, will assume the role of chief executive officer.
Carnival stock rose 10% to $10.62 on Friday. But shares have lost 47% over the past year on concerns that a possible recession could curb consumer demand for cruises.
While the travel industry as a whole took a hit during the pandemic, cruise lines absorbed a significant amount of the pain. Although travel has recovered, cruises have been slower to follow, given rising fuel and cost inflation, in addition to Covid-19 restrictions that have excluded unvaccinated travelers from sailing.
Carnival’s second quarter results may encourage investors that the slump may end soon. Indeed, some analysts have been optimistic that a strong summer session could be a boon for cruise lines.
Email Sabrina Escobar at [email protected]
